Bitcoin Faces Turbulence as U.S Policies and Market Volatility Impact Crypto Landscape
Summary:
Bitcoin (BTC) approaches its first monthly close of 2024, encircling its starting point for the year with implications for further uncetainty. Amidst changes to the Federal Reserve and U.S politics, Bitcoin network fundamentals are preparing for a 4% difficulty increase. Despite turmoil in Chinese markets and issues for Evergrande, the prime focus is on the U.S.'s upcoming decisions on interest rates and economic policy. The uncertainty has triggered a nervous sentiment among investors, as portrayed by the Crypto Fear & Greed Index, which recently sunk to a low unseen in three months.
Bitcoin (BTC) is gearing up for its initial monthly closure of 2024, circling back to its baseline value for the year. Amidst a significant week for U.S. economic strategies, BTC's price is persistently establishing itself around the $42,000 mark. This instability opens up the possibility for more volatility, with the last month experiencing a peak of $49,000, quickly followed by 20% losses. Crypto markets now face turbulent times due to potential amendments to the Federal Reserve and U.S politics. Consequently, there might be an impact in the crypto market as repercussions of the introduction of the inaugural U.S. spot Bitcoin exchange-traded funds (ETFs) are felt. However, Bitcoin network fundamentals are making preparations to overcome the drop from $49,000 and anticipate a 4% difficulty increase in the following days. Cointelegraph brings forth the crucial factors affecting Bitcoin and crypto market performance as February nears.
Bitcoin ended January on a familiar note. In contrast to previous periods, the weekend gave actionable signals for traders, with BTC/USD reaching $42,800 on Bitstamp, marking its highest since January 18. The latest BTC price action is a result of a relief bounce that occurred last week after a turnaround at $38,500, though some traders remain skeptical. Popular trader Skew, however, is cautiously optimistic about Bitcoin’s position on lower timeframes, identifying the $42,000 as the crucial level to observe.
The upcoming week may be turbulent due to potential challenges in the macroeconomic landscape. The focus will be on the U.S. decisions influencing interest rates and economic policy. Despite disturbances in the Chinese markets and difficulties for the real estate giant Evergrande, the primary concern this week falls on the U.S. Federal Open Market Committee's (FOMC) meeting on January 31. Markets widely believe that the FOMC meeting will not cause any drastic alterations and anticipate interest rate cuts to begin in March.
Amidst these concerns, Bitcoin network fundamentals are expected to show strong upward momentum. According to live predictions from BTC.com, difficulty is on track to grow by 4% at the next adjustment, setting a new record high, overturning the 3.9% decline witnessed two weeks ago. The Bitcoin blockchain's hash rate is also showing strong recovery, increasing by 10% in just the previous week.
The recent reversal in Bitcoin's price holds significance for speculators. Analyst James Van Straten highlights that the $38,800 mark represents the aggregate realized price for short-term Bitcoin holders, functioning as support over the previous year. The increasing realized price indicates that on average, investors are purchasing BTC at higher prices, pointing towards the sustainability of this bull run. However, the pullback from $49,000 prompted a significant exit among these short-term holders.
Crypto market sentiment continues to falter as major entities add sell-side pressure. Concerns about the Grayscale Bitcoin Trust (GBTC), now a spot ETF, have also worried the market. Last week, the Crypto Fear & Greed Index sunk to its lowest in three months, indicating nervous sentiment among investors. Regardless of these unease, research firm Santiment points towards a potentially bullish scenario, believing that the crypto sector might play catch-up with the S&P 500, which recently recorded new all-time highs.
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Published At
1/29/2024 12:08:47 PM
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